NPCI Postpones UPI Merchant Fee Rollout Until After Diwali
The National Payments Corporation of India has delayed the implementation of Merchant Discount Rate charges on certain UPI merchant transactions until after Diwali. The fees were originally set to begin on October 15, 2026, but the UPI and Services Steering Committee decided to postpone them amid concerns from merchants and payment firms. Under the proposal, a 0.4% MDR would apply to selected person-to-merchant transactions above Rs. 2,000, while person-to-person transfers and smaller merchant payments would remain free.
NPCI's decision follows objections from merchant groups, fintech firms and payment processors worried about introducing new costs during the festive shopping period. The UPI and Services Steering Committee met on October 13 and opted to shift the planned start beyond Diwali, with a new date to be shared later.
The proposed structure would charge 0.4% on chosen P2M payments above Rs. 2,000. Person-to-person transfers and merchant payments up to Rs. 2,000 would stay free. A cap of Rs. 300 would apply at Rs. 75,000 or more, while certain essential categories above Rs. 2,000 would face a flat Rs. 5 fee. Small merchants using existing QR codes for up to Rs. 1 lakh monthly would remain zero-MDR.
Merchants, especially larger sellers and service providers, may face added acceptance costs if the framework takes effect, potentially influencing how they price or route digital payments. Consumers might not be directly charged, but some businesses could pass on costs indirectly. Small merchants and person-to-person users may see little change because those categories remain outside the proposed fee. Payment firms may gain preparation time, while the delay could soften near-term operational and festive-season pressures.